If our brains tend to want immediate satisfaction, and our financial values may or may not be leading us in the right direction, how can we figure out what we really want?
Financial goals are important tools for helping us figure out what’s important for personal success. Writing both short and long-term goals us track our progress over time - and see where our behavior may not match our vision for financial success.
Setting financial goals gives us the chance to step back from everyday pressures, allowing us to think about how we’d like our life to be rather than as how it happens to be right now. Long-term goals are “big picture” and could include anything from graduating from college to buying a home. We all have busy lives and there's not always time to reflect on exactly where all our work (school, jobs, etc.) is ultimately leading. Writing down financial goals can help you prioritize how you’ll spend your money, save your money, and budget your time.
On the other hand, short-term goals are also important. In fact, steadily working towards short-term goals is the best way to reach your ultimate, big-picture goals. For example, you can't save for a car if your bank account isn't growing each month. And it’s hard to get into college if you're making bad grades month after month. So achieving short-term goals lays the groundwork for future success, ensuring that your daily behavior matches your long-term vision for success.
Whether you're working on short or long-term goals, they should be SMART:
For example, it’s easy to say “I want to be rich,” but it’s entirely different to set step-by-step milestones that are required to achieve that goal. How much money – specifically – is “rich” for you? What career will enable you to meet your goal? What kind of education is required? What do you need to do now to prepare to get that education? By breaking down each step and setting SMART goals, you'll be much more likely to stay on track each day, week, month, and year.
One of the main reasons people never get around to realizing their financial goals is simple procrastination. We all have demands on our time – from work to friends and family. And when we do have free time, it’s easy to get distracted or think that it would be better to do it later.
The great thing about goals is that you don’t have to figure everything out now – you can revise them as your interests and priorities change. And, if you’re not sure about your financial goals, that’s OK too. Try our goal setting exercise – we offer some suggestions that you might find useful and it's easy to attach a check list to each goal.